0330 GMT - Australian bank valuations have become less attractive, says Dougal Maple-Brown, head of Australian value equities at fund manager Maple-Brown Abbott. Still, Maple-Brown sees that relative to the industrial sector, banks are closer to "fair value "rather than outright expensive." The fund manager's portfolios have over the past year held overweight positions in ANZ, NAB and Westpac, and while it concedes that the lenders' earnings profile didn't look "very exciting," it viewed the valuations as reasonable. More recently, a rerating of the banks has seen Maple-Brown Abbott trim its positions. "The speed of our selling is of course also influenced by other buying opportunities." (alice.uribe@wsj.com)

0151 GMT - Treasury Wine Estates' sales will benefit from China's removal of tariffs on Australian wine, but margins will take time to expand, UBS analyst Shaun Cousins says. He anticipates higher volumes, with price rises for Penfolds-branded wine lifting revenue per case. Yet he tells clients in a note that earnings-margin expansion will be slowed by higher costs and continued pressure on Treasury's Americas business. Cousins makes no changes to his FY 2024 EPS forecast for the company, but raises his EPS projections for FY 2025, FY 2026 and FY 2027 by 3%, 5% and 12%, respectively. UBS lifts the stock's target price 8.9% to A$15.25 and maintains a buy rating. Shares are up 1.9% at A$12.68. (stuart.condie@wsj.com)

0055 GMT - Vulcan Steel is optimistic that it can benefit from an economic recovery in key markets, and RBC is prepared to be patient to see if it's right. Vulcan Steel's earnings have been crimped by economic weakness, falling global pricing and customers running down inventory. Still, the company is confident it is well placed for a turn in the cycle, which could accelerate a recovery in volumes. "We remain hesitant to step up at this point, and await a clear inflection point in domestic activity before taking a more constructive view," says analyst Owen Birrell after starting Vulcan Steel at sector perform with a A$9.00 target. Vulcan Steel is up 0.5% at A$8.47. (david.winning@wsj.com; @dwinningWSJ)

0051 GMT - REA's management could upgrade its outlook for FY 2024 listings growth when the Australian property advertiser updates the market on its 3Q performance, Bell Potter analyst Michael Ardrey reckons. He tells clients in a note that data from REA's Proptrack unit suggests that January-February listings growth in Australia's state and territory capitals was the strongest since 2012. This helps underpin an increase in Ardrey's full-year listings growth forecast to 5%, from 4% previously. Bell Potter lifts the stock's target price 9.8% to A$191.00 and keeps a hold rating. Shares are flat at A$185.55. REA is 61% owned by News Corp., which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal. (stuart.condie@wsj.com)

0047 GMT - The lack of certainty regarding the outlook for steel in the Asia-Pacific region is among reasons stopping RBC Capital Markets from being bullish about BlueScope Steel right now. In a note, analyst Owen Birrell highlights a supply glut in China, where 90 million tons of steel is being pushed into the seaborne market, compressing East Asian steel prices and spreads. "Import parity pricing is under pressure, and would be lower if not for the weak Australian dollar," says RBC, initiating coverage of BlueScope with a sector-perform call and A$24.50 price target. BlueScope is down 1.3% at A$23.53. (david.winning@wsj.com; @dwinningWSJ)

0040 GMT - Australian real-estate investment trusts' gearing will likely be okay if cap rates move as Morgan Stanley expects. Only Charter Hall Long WALE REIT and Centuria Industrial REIT are likely to exceed their self-imposed gearing ranges, analyst Simon Chan says in a note. But in terms of gearing linked to loan covenants, no REITs are expected to breach, with Charter Hall Long WALE REIT coming closest to its 50% limit, at 48%, Morgan Stanley says. The bank also highlights that gearing targets of listed REITs "are all generally more conservative than the leverage that is implemented in the unlisted real estate space, where it is not uncommon to see direct investors have debt-to-assets up to 50-60%." (david.winning@wsj.com; @dwinningWSJ)

0038 GMT - Domain keeps its bull at Bell Potter despite analyst Michael Ardrey lowering his listings forecasts for the Australian property advertiser. Ardrey tells clients in a note that he now expects listings volumes to slip by 2% in FY 2024, compared with his previous outlook for 1% growth. He cites Domain's aggressive pricing strategy as a factor in his increased conservatism, which also leads to him tempering his FY 2025 listings forecast. Bell Potter lowers the stock's target price 3.8% to A$3.75 and keeps a buy rating. Shares are down 0.8% at A$3.255. (stuart.condie@wsj.com)

0032 GMT - Cap rate expansions are almost over for Australian commercial property, reckons Morgan Stanley. It points out that, for office, the current 191 basis-points spread between the market cap rate and the Australian 10-year bond yield is within 37 bps of the 20-year average. It's a similar situation with regional malls. "We think the June 2024 set of revaluations will see asset values decline, following which things could stabilize," analyst Simon Chan says in a note. (david.winning@wsj.com; @dwinningWSJ)

0029 GMT - Catapult Group looks to be trading at fair value for Bell Potter analyst Chris Savage despite his slightly softer view of the sports-tech provider's most recent fiscal half. Savage tells clients in a note that he is feeling more conservative about Catapult's annualized contract value for the six months through March, lowering his year-end forecast to US$85.7 million from US$87.8 million. His ACV growth rate forecasts for FY 2025 and FY 2026 are unchanged at 16% and 15%, respectively. Savage maintains his revenue, earnings and cashflow forecasts. He lifts its target price 4.9% to A$1.50, rolling forward his valuation by a year and updating for currency moves. Shares are up 5.2% at A$1.63. (stuart.condie@wsj.com)

0003 GMT - Aon's April reinsurance renewal is positive for reinsurance buyers in Australia, auguring well for the mid-year renewals in June which is relevant for Suncorp and IAG, say Goldman Sachs analysts Julian Braganza and Brian Kim in a note. "Aon flagged strong appetite from reinsurers for catastrophe risk ahead of the mid-year renewals. Aon expects these trends to continue into June 2024," GS says, noting that mid-year renewal discussions are happening earlier with reinsurers willing to secure capacity. (alice.uribe@wsj.com)

2344 GMT - The market remains unconvinced Westpac can deliver its technology transformation project, called Unite, on-time and on-budget, says UBS analyst John Storey in a note. He says that while Unite is "desperately needed," it reckons shareholders should expect board and executive management accountability for the highly complex, multi-year project. UBS notes Westpac's share price is up 13% year-to-date, with the group's recent 1Q FY 2024 trading update providing better-than-expected net interest margin delivery, providing a catalyst for re-rating. Still, UBS stays sell rated on the stock.(alice.uribe@wsj.com)

2324 GMT - Australia's mortgage growth is steady in February, say Morgan Stanley analysts in a note. New data for February shows system housing loans grew at an annualized rate of around 4.5% in February versus around 4.5% in January and December. For the major banks, ANZ's growth was softer in February at around 5% compared with 6.9% in January. CBA, NAB and Westpac were broadly stable at 3%. Regional lenders Bendigo and Adelaide Bank and Bank of Queensland had a stronger month, notes MS. "Despite these moves, the majors and regionals are tracking in line with our housing loan forecasts," says the investment bank. (alice.uribe@wsj.com)

2321 GMT -- Although China's decision to remove tariffs on Australian wine is positive for Treasury Wine, E&P Capital analyst Phillip Kimber cautions that it will be some time before there is a benefit to Treasury's bottom line. He forecasts the impact of the tariff removal on Treasury's net profit will be relatively modest until FY 2027. And given that the market for wine overall in China has fallen due to challenging economic conditions, he says it is unlikely that Australian wine into China will return to historical levels of more than A$1 billion in annual exports. But the key factor for Treasury is that its Penfolds brand, which prior to the tariffs contributed the vast majority of its earnings in China, remains strong among Chinese consumers, Kimber says. (mike.cherney@wsj.com)

2159 GMT - Australia's diversified financials companies remain a mixed bag, says Jefferies analysts Simon Fitzgerald and William Richardson in a note. They say that the companies, which include financials like AMP and Challenger, as well as tech companies Hub24 and Netwealth, have disparate business models and unique earnings drivers. Still, Jefferies views the December reporting season as being broadly better than it was expecting, noting six of the nine div-fin companies under Jefferies coverage beat market estimates. It adds that the diversified financials forward median price-earnings ratio has increased in recent months and remains in line with long term averages at 13.9 times. Jefferies reckons AMP is worth a look, but Netwealth is overvalued. (alice.uribe@wsj.com)

2127 GMT - The removal of Chinese tariffs on Australian wine imports is a game changer for Treasury Wine Estates, says Jefferies. That's because it can lead to elevated growth as supply is built, analyst Michael Simotas says. It also facilitates pricing power and improves the predictability of Treasury Wine's earnings. "Our estimates now allow for upside from incremental price increases in FY 2025, and volume from FY 2026," says Jefferies. "Treasury Wine's growth profile should now be comfortably double-digit, and we see scope for a re-rate, given improved earnings predictability stemming from supply constraint." Treasury Wine used to earn around A$200 million Ebits from China. If it can recover around 40% of this through volume and price then there's potential for some A$2.00/share upside to the stock price, Jefferies says. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

April 02, 2024 00:02 ET (04:02 GMT)